The Insurance Regulatory and Development Authority of India’s (IRDAI) proposed plan to overhaul the insurance distribution system could reduce the income of intermediaries by 70 percent and lead to the loss of one million jobs. Insurance Brokers Association of India (IBAI) gave this information on Tuesday. The association warned that implementing the proposals made in the consultation paper titled Recalibrating Economics of Insurance Distribution could also lead to job losses in insurance companies. It may also undermine the long-term goal of increasing access to the insurance sector. IBAI has more than 800 members.
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A consultation letter was brought on September 23
IRDA issued this advisory letter on September 23. After this, there was widespread concern about the impact on insurers and intermediaries. This policy has been introduced with the aim of bringing about a change in the insurance sector in the interest of consumers. The consultation paper presents a framework for comprehensive reforms related to insurance distribution, its structure, costs, commissions, market conduct, transparency and use of digital infrastructure. IBAI director Pawanjit Singh Dhingra told reporters here that the industry’s revenue would fall by 70 percent and the proposals would lead to loss of one million jobs.
Demand for extension of time
He said the time limit for giving suggestions was too short and should be extended by more than two months till December this year. After releasing the consultation paper, IRDA chief Ajay Seth defended the proposed changes, citing excessive commissions earned by insurance companies. IBAI officials said they agree with the objectives of the regulator’s proposal, but the body will meet Irdai on Friday to raise its concerns.
